Fed to spend $45 billion a month on Treasury bonds

[Lethn]

http://www.journalgazette.net/article/20121212/NEWS03/121219860

The fed are on the move and are printing money like crazy and trying to inflate the economy even more, I can feel a depression coming, gold has just spiked massively.

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[hazek]

Wait, wasn't it $40bil/month a month ago?

[Lethn]

lol dunno, may have been a rumour but $45 billion has been officially announced now.

Edit: oh wait double checked, looks like they're going at it for each month for sure

[hazek]

Well you are right but so was I:

    *FED BOOSTS QE WITH $45 BILLION IN MONTHLY TREASURY PURCHASES
    *FED TO KEEP BUYING MORTGAGE BONDS AT PACE OF $40 BLN PER MONTH
    *FED SAYS MONTHLY PURCHASES TO TOTAL $85 BLN
    *FED ADOPTS ECONOMIC THRESHOLDS FOR POLICY TIGHTENING
    *FED: RATES TO STAY EXCEPTIONALLY LOW WITH JOBLESS ABOVE 6.5%
    *FED: RATES TO STAY LOW WITH INFLATION SEEN AT 2.5% OR LESS


They are doing BOTH! $40bln mortgage bonds + $45bln treasures + ZIRP until unemployment above 6.5%.  

There can't be any question in anyone's rational mind anymore where this is leading.  

[Lethn]

KABOOM!

[Adrian-x]

This inflation is one way to minimise the unemployment liability, ie. Inflation will force you to work or die, as you will not be able to live off unemployment insurance.

[marcus_of_augustus]

I'm so glad someone put this up ... $45 billion of MBS AND $40 billion of UST-bond purchasing (i.e. money printing) is now being carried out by US Fed. Res. .... indefinitely or until "economy improves".

I was going to post same topic yet titled "US Fed. Res. now Printing US$32,973 per second" ... to make it seem more comprehensible, yes I know it is fantastical but it is really happening.

http://www.zerohedge.com/news/2012-12-12/fomc-does-exactly-what-market-told-it-do here's what the skeptics are muttering.

In the not too distant future bitcoin inflation rate may drop below US$ inflation rate

[amagimetals]

Time to start buying gold  .

[Melbustus]

Yup. This was inevitable. Since their current $45B/mo in Operation Twist (selling their short duration holdings and buying long ones) is coming to an end, they feel they can just replace that $45B/mo of Twist (which *didn't* actually increase the Fed's net balance sheet) with outright *net* new purchase of treasuries. Now that's how you monetize sovereign debt!

This is, of course, in addition to QE3's $40B/mo in mortgage securities purchases.

Over the course of QE2, Op Twist, and QE3, they've softened everyone up for this outright, no-stated-end-date, purchasing of new treasuries. There would've been HUGE political backlash had they tried this from the outset in 2010 (QE2). This was a very nice set-up to get everyone used to the idea.

Now that such outright, unending, direct bond purchases are indeed being made, the next logical step is for the Fed to increase the monthly amount. I call that happening within the next year or so.

Curiously, this reckless debasement can actually keep yields low since the Fed can now quickly and easily buy ALL the bonds they want! So, hello inflation with low bond yields in an environment of high (and increasing) debt/deficits. Strange world.

[johnyj]

There will be no inflation, the CPI index do not include house price and treasury note price

I still doubt it will improve the employment right away

On the bond buying side, government will get more money to spend, then government sponsored long term projects could absorb some jobless people, but there is a debt ceiling

On the MBS buying side, normal people with a house will find their home worth more and they need to pay less interest, this will increase their income but they do not have that much to buy

[Lethn]

Johnyj, try thinking for a moment, where is all that money going to come from to purchase the bonds? Oh yeah! Printing! Because there sure aren't countries that can afford it in taxes! Just like when the banks got bailed out the government had to ask the fed for money to do it, how did they get that money? Printing again! You think the federal reserve actually has any money of its own? Trust me, it doesn't, even if it did have stuff like gold for instance which they have reportedly been stocking up on, they certainly aren't going to share it with you muppets, you're getting conned and you don't even know it, it's the ultimate scam.

lol you're welcome marcus_of_augustus, I just thought I'd put it up because I was watching CNBC and Bloomberg when they were making a big deal about it so I thought it might be interesting.

[MPOE-PR]

Curiously, this reckless debasement can actually keep yields low since the Fed can now quickly and easily buy ALL the bonds they want! So, hello inflation with low bond yields in an environment of high (and increasing) debt/deficits. Strange world.

Not that strange a world, just an end to fiat. There's no rational reason anyone would save in any fiat anymore and gold loses in front of BTC for technical reasons (too easy to steal, too difficult to use). So basically, the Fed just gave us the United States whole.

Thanks, I guess.

[bitfreak!]

https://www.youtube.com/watch?v=c8Fxn4of1dg

[johnyj]

Johnyj, try thinking for a moment, where is all that money going to come from to purchase the bonds? Oh yeah! Printing! Because there sure aren't countries that can afford it in taxes! Just like when the banks got bailed out the government had to ask the fed for money to do it, how did they get that money? Printing again! You think the federal reserve actually has any money of its own? Trust me, it doesn't, even if it did have stuff like gold for instance which they have reportedly been stocking up on, they certainly aren't going to share it with you muppets, you're getting conned and you don't even know it, it's the ultimate scam.

The whole banking business is constructed upon trust. People trust money, it is this trust gave banks so much power that they should not have. Unless there is a high inflation rate, this trust is almost unbreakable. As long as people trust their money in the bank (backed by FDIC), as long as they get a job and have dollar to pay the bill, they do not care about what FED do.

FED by doing this will surely create job and improve the economy, but it is very questionable that this way is efficient: The purchasing power FED created will first go into banks' pocket, until banks get well feed, they won't do anything. For each 2 dollars they created, there maybe only 1 dollar actually goes out and create a job.

The money borrowed by government could be more efficient, those money will be directly put into construction/modernazation projects to create job immediately

[Lethn]

It isn't based on trust, it's based on deceit, central bankers have been lying for centuries about how much their fiat currencies are worth and now finally people are catching on how these notes are made, they're supposed to be backed by gold but of course they're keeping tight lipped about where it all is. As far as I'm concerned, no government should be able to borrow money in the name of the taxpayer because the people who borrow this money don't even pay out of their own pocket, you should either raise the money through taxes or not at all. Otherwise it just simply isn't mathematically sound and that's how inflation gets started as the central bankers come in acting as lenders of last resort.

[johnyj]

Take FRB for example, the reason that banks can do FRB is because people trust bank and seldom tried to withdraw their money to see if they are there, this is a normal behavior of almost everyone. And further, banks can set some penalty on those early withdraws, to technically secure their FRB

[zero3112]

http://www.zerohedge.com/news/2012-12-14/qe-4-folks-aint-normal-what-you-need-know-about-feds-latest-move